Rationality can be influenced by emotions from "summary" of Irrational Exuberance by Robert J. Shiller
The idea that rationality can be influenced by emotions is a fundamental concept in understanding the behavior of markets. Emotions play a crucial role in shaping our decisions, often leading us to act in ways that may not be entirely rational. As human beings, we are not always driven solely by logic and reason; our emotions can cloud our judgment and influence our actions in significant ways. In the context of financial markets, emotions can have a profound impact on investor behavior. When investors are gripped by fear or anxiety, they may be more likely to sell their assets, even if doing so goes against their long-term financial goals. Conversely, when investors are feeling optimistic or confident, they may be more inclined to buy assets, even if the fund...
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